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Britons' wealth relies on housing Britons' wealth 'relies on homes'
(about 7 hours later)
More than half of Britons' personal wealth on average is tied up in their homes, research suggests.More than half of Britons' personal wealth on average is tied up in their homes, research suggests.
A decade ago, about 40% of personal wealth was tied up in this way.A decade ago, about 40% of personal wealth was tied up in this way.
Rising house prices are the key reason for the growth in importance of housing to many Britons, according to UK insurer Prudential.Rising house prices are the key reason for the growth in importance of housing to many Britons, according to UK insurer Prudential.
While the importance of property to peoples' finances has been growing the role that pensions, life insurance and shares have diminished, it added.While the importance of property to peoples' finances has been growing the role that pensions, life insurance and shares have diminished, it added.
A decade ago, 58% of UK household wealth was made up of financial assets such as pensions, life assurances, shares and savings.A decade ago, 58% of UK household wealth was made up of financial assets such as pensions, life assurances, shares and savings.
But since 2001, the value of non-financial assets, such as housing, has risen dramatically, while pensions and shares have suffered from stock market volatility.But since 2001, the value of non-financial assets, such as housing, has risen dramatically, while pensions and shares have suffered from stock market volatility.
And the dominant role of property in peoples' finances is set to continue. The Insurer predicted that by 2009, 60% of peoples' wealth would be tied up in bricks and mortar. And the dominant role of property in people's finances is set to continue. The insurer predicted that by 2009, 60% of people's wealth would be tied up in bricks and mortar.
"It is interesting to see how important property has become in constituting our main source of financial wealth," said Ali Crossley, director of Lifetime Mortgage at Prudential."It is interesting to see how important property has become in constituting our main source of financial wealth," said Ali Crossley, director of Lifetime Mortgage at Prudential.
"House prices have risen significantly over the last 20 years and this is one of the reasons why we have seen such a shift in wealth components," he added."House prices have risen significantly over the last 20 years and this is one of the reasons why we have seen such a shift in wealth components," he added.
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The fact that so much of UK personal wealth is tied up in property has long been a cause for concern for some economists.The fact that so much of UK personal wealth is tied up in property has long been a cause for concern for some economists.
In recent years, many people have borrowed against the increased value of their home to fund consumer spending, pay off other debts or fund home improvements.In recent years, many people have borrowed against the increased value of their home to fund consumer spending, pay off other debts or fund home improvements.
The concern is that rises in UK interest rates could tip many people's finances over the edge.The concern is that rises in UK interest rates could tip many people's finances over the edge.
The Bank of England's Monetary Policy Committee (MPC) meets on Wednesday to discuss the next move in UK interest rates.The Bank of England's Monetary Policy Committee (MPC) meets on Wednesday to discuss the next move in UK interest rates.
Most experts are expecting the MPC to keep rates steady, but a rise from their current level of 5.25% is a possibility.Most experts are expecting the MPC to keep rates steady, but a rise from their current level of 5.25% is a possibility.